Being self-employed, I understand the value of passive income, and am prepared to work hard to get things set up.
What I am wondering is if anyone has quantified
how much it costs to get going with wraps.
ie. solicitors fees, accountant’s fees, etc.Is one committed to doing more than one deal to make it worthwhile?
Do people generally find it is best to fund the deposit for the next deal with income from a regular job. It would seem to me at this rate that I could only get one property every year or two. Do I need to generate more cash flow before starting wraps?
Hi IB,
Thanks for your post and welcome to the property investing community.
You ask:
quote:
What I am wondering is if anyone has quantified
how much it costs to get going with wraps.
ie. solicitors fees, accountant’s fees, etc.I’d recommend perhaps doing the first one in your own name… only to see whether or not you like the strategy and also to save the $2,000 odd dollars it costs to set up a good structure.
Re: solicitors fees. This all depends on where you invest. If in Vic…. it will cost you nothing for the contract, but it will cost you about $700 for the conveyancing. Same goes for NSW (I think).
In Qld though… there are a few lawyers who seem to charge like badly wounded bulls. I heard one firm charge $5,000 before you’d even purchased a property! Still, with more competition, prices seem to have started to fall.
Perhaps the kicker in all this is that all States seems to disallow you to sell b4 you buy in a wrap. This means that you have to settle on the property b4 you can onsell, so you will need to fund the deposit and closing costs and then receive back your buyer’s depsoit.
So, this all seems to be leading no where [
]What I’d say is to allow:
- 20% of the purchase price as a deposit
- 5 to 7% of the purchase price as closing costs
and that will see you right.
Thanks again for your post.
Bye
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
IB
another take in this is: if you are intending to buy more than one property it is possible to set up a trust (say between yourself and partner, children, etc) with you as trustee.
This is considerably cheaper than setting up the company as well.
If all goes well and you do need a corporate trustee, later on you can resign and appoint a company as trustee.
There are some pros and cons with this, but it can make the initial phase less expensive. You must seek advice from your solicitor and accountant (two very important menbers of your personal team) to be sure that you inderstand all of the implications.
cheers
the Bruce
Thanks Steve and Bruce.
Great advice. As an Architect, I already have
all the property we own in a trust, with my wife and I as trustees. Had thought of doing the company trustee thing later.Am I right in thinking that with $900,000 worth of property, with $560,000 worth of debt, our LVR
is looking reasonable?Thanks again for the advice.
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